Liability Insurance for Small Business

What Is Liability Insurance?

Liability insurance is a type of coverage that protects you from things you can be blamed for. If you're sued for doing something wrong or for not doing something you should have done, liability insurance can cover the legal bills.

For example: say there's a puddle near the entrance to your store. A customer slips, falls, and hits her head. She goes to the ER to make sure she doesn't have a concussion. Whether or not you knew about the puddle, she could blame you for not cleaning it up and thus causing the incident – and your liability insurance could pay her medical bills.

Think of liability insurance as the rich uncle you never knew you had. It provides financial backing when things go wrong so you can act fast and prevent small problems from becoming big ones. It empowers you to take care of the people who matter and defend your business if it's being challenged.

Liability insurance can cover the bills if you're accused of doing something wrong.

Which Liability Insurance Policies Does My Small Business Need?

Let's say you run an advertising agency next door to a bakery. You and your neighbor won't need the same type of liability insurance. Sure, you could both be blamed for a customer injury, but the bakery gets a lot more foot traffic, which means more potential accidents. The flip side, though, is that your customers are more likely to say you made a mistake that cost them money.

Nearly every small business needs some kind of liability coverage because every business has some level of risk. And realistically, you'll eventually work with someone (like a landlord, client, or business partner) who will ask you to have it.

The trick is figuring out which policies match your risks. This chart highlights the most popular liability insurance policies for small businesses and explains how they can protect you when someone accuses you of wrongdoing.

75% of businesses in the US are underinsured by 40 percent or more. Source

How Do I Get a Certificate of Liability Insurance?

A Certificate of Liability Insurance is an insurance policy's proof of purchase. In order to get a certificate, you have to buy a small business liability insurance policy.

Why might you want a certificate? It's a pretty common request from people who have a stake in what happens to your business. For example: your landlord might want to see a Certificate of Liability Insurance for your General Liability policy. A client might want one for a Professional Liability Insurance policy.

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